Referral programs are a great way to cost-effectively recruit new employees. According to ERE.net’s Dr. John Sullivan:
“Benchmark organizations dedicating resources and formally managing their [referral] programs are very close to producing 50% or more of all external hires from their programs — nearly double that of the average firm. They are also using their employee referral programs to accomplish objectives not directly related to closing requisitions, including increasing workforce diversity, and influencing their organization’s employment brands.”
Why are referral programs so powerful for both employers and candidates?
Employees who utilize referral programs have an opportunity to help their contacts land a job. Referring a qualified connection to an opening allows the person to build their relationship with that connection. It also builds their good karma within their network. Networking is still one of the best ways to land a job, and if your contacts have referral programs at their organizations, the employees are typically the first to know about an opening and may receive a referral reward if their contact is hired.
Referral programs can truly benefit employers – especially hiring managers. Referrals often result in better applicants who are more qualified. Employees don’t often refer a friend or contact who is unqualified for the job opening because that would be embarrassing for them. They also don’t typically refer someone who would not fit in with the company culture, or who they would not get along with on-the-job, essentially weeding out candidates who would probably have not made it through the hiring process.
Because employees typically refer someone who is qualified, fits in with the company and likeable, the new hires from referral programs tend to stay at the company for longer periods of time, increasing retention and decreasing turnover.
Do you have an employee referral program? How well has it worked for your organization?
Heather R. Huhman is the Career & Recruiting Advisor for Cachinko. She is also the founder & president of career and workplace education and consulting firm Come Recommended, author of #ENTRYLEVELtweet: Taking Your Career from Classroom to Cubicle (2010), national entry-level careers columnist for Examiner.com, and blogs about career advice at HeatherHuhman.com.